Welcome to the society of expectations

We will once again get used to 2-2.5% growth per year in the economy, which is the average over the past 160 years. If the growth isn’t that big, we will experience the slow progress as a setback. We’ll expect high salaries, higher spending and a better service level in the public sector. There’s light in the darkness, like when we turn on the Christmas lights or as in Lyon light up the entire town – and there’s actually more light than we expected.

2016 looks to be a financially sound year. Unemployment is low and keeps falling, a lot of sectors are experiencing growth and in education it also looks like young people increasingly choose educations with better job opportunities in the future, than what we saw 5-8 years ago.

Danmarks Statistik has also adjusted the economic growth to be upward bound. After an examination of the figures, it turns out – partly due to really good export figures – that the growth for some of the crisis years has been higher than anticipated. It’s especially in 2013, where the BNP growth has been adjusted by 1.1%, that it really makes a difference. The 1.1% is the same as the difference between stagnation and a relatively good progress and growth. The upward revisions for 2014 and 2015 are still provisional and might turn out to be even higher. So maybe the crisis the past 2-3 years was just an illusion.

If you look at the car sales, it has also surprised many people that cars are being sold in Denmark like never before. The sale of big cars has also risen in past years. Maybe the explanation is that it’s going significantly better than we were told and that many experience it in their personal finances. Even house prices are more evenly rising across the country.

Was that the reason the retail business started moving upwards again? Black Friday set a record again this year with ca. 2.5 billion kr. in revenue in a single day. Christmas shopping is also headed towards a new record after the crisis. All in all, the prognosis for the foreseeable future looks pretty good.

Politically the country is a little less stable. Majority in the Danish parliament was difficult for the old Løkke-government and their 2025 plan. But if the politicians have also been notified continuously on the recovery of the economy, then it’d be a shame for a bourgeois majority (albeit small), to lose power and surrender it to a social-democratic led government, right now when everything points to things going well in the years to come. Much better then, to enter a new government coalition with Liberal Alliance and Konservative and keep things afloat till next election. The administration might even try to take credit for an economic upturn by then. There’s only one thing to say about that; there’s very little indication that Christiansborg controls growth in this country. It is far more often other countries, businesses and consumers in unison that affect these conditions.

For those sitting with excel sheets, prognoses and planning for next year, there might be an expectation of growth. But don’t trust economic prognoses, when you have to work with the rate of the economic growth. Economic prognoses for the coming 6 to 18 months are by and large always wrong. They are extraordinarily wrong and are often as misaligned as the original growth figures for 2013 – that is, predicting progress when it isn’t there and predicting downturns when it instead rises. It’s better to use the most recent economic trend indices – consumer expectations, order placements in industry and to lesser extent building indices.

Finally, let me dwell on the society of expectations. Christmas is right around the corner and there’s probably nothing that can light up the darkness as well as a child looking at the Christmas tree on Christmas Eve. Expectations are right around the corner.

Published here 2017